After raids on three hospitals in Los Angeles and Orange counties, two hospital executives were detained Wednesday, being accused of using homeless people to commit insurance fraud, Los Angeles Times reported.

FBI agents arrested Rudra Sabaratnam, the owner and CEO of City of Angels Medical Center, and Estill Mitts, the operator of the alleged facility called the Assessment Center in the town’s Skid Row area. A 21-count grand jury indictment, unsealed Wednesday, accuses the couple of committing healthcare fraud, as well as receiving illicit kickbacks for patients’ referrals.

Investigators discovered a business practice that was used to defraud taxpayer-funded healthcare programs of millions of dollars by taking on homeless patients for unnecessary medical services. Officials said Medicare and Medi-cal were billed for costly and unjustified medical services from August 2004 until October 2007.

According to Laura Eimiller, spokeswoman for FBI, Sabaratnam is the chief executive of the City of Angels Medical Center. He is also charged with eight counts of paying kickbacks. If convicted on all of them, the man could face 50 years in federal prison, the U.S. attorney’s office in Los Angeles stated.

Mitts is charged with four counts of receiving kickbacks, six counts of money laundering and two counts of tax evasion for not having reported over $479,000 in income three years ago and over $620,000 in income one year later. He made his first court appearance on Wednesday and was released the same day on $25,000 bail and confined to his home. Mitts could face a maximum sentence of 140 years in prison, the authorities said. His lawyer refused to comment on the subject.

John Vandevelde, Sabaratnam’s legal representative, claimed during court hearing that the charges against his client should be regarded as "not that significant." However, Sabaratnam was being held under arrest in the Metropolitan Detention Center until another hearing scheduled today, Eimiller asserted.

Investigators in this case found that the suspects initially tried to recruit patients by promising them food and shelter while being hospitalized. When that wasn't a strong motivation, they would pay $20 or $30. While staying in the healthcare institution, those homeless people received negligible treatment for actual and fictional illnesses.

"These criminals thought they could get away with this scheme because they figured no one cares about the homeless on Skid Row," City Attorney Rocky Delgadillo stated. "They were dead wrong."

Besides City of Angels Medical Center, the authorities also investigated Los Angeles Metropolitan Medical Center and Tustin Hospital and Medical Center in Orange County. Pacific Health Corporation, Tustin, CA, the owner of both hospitals, declared that it had been cooperative with the FBI agents and supposed it would be cleared of any type of unlawful conduct.

In line with U.S. Atty. Thomas P. O'Brien, the inquiry was continuing and other defendants were expected to be accused. Mitts' operation could have cost the federal government an enormous amount of money - $11 million - in improper payments, prosecutors said. City of Angels received $5 million in healthcare payments.